Jan 19, 2016

Marubeni cultivating fertilizer business in Myanmar

Marubeni will get into fertilizer production in Myanmar, spending some 2 billion yen ($16.8 million) to set up major plants spanning a total of 15,000 sq. meters.

The Japanese trading house has secured a 35,000-sq.-meter lot within the Thilawa industrial park near Yangon. It will first build a 7,000-sq.-meter plant to make soil enhancers and other products starting in April 2017, and market the output to farmers via local agricultural goods retailers.

Marubeni also plans a second plant for processing imported chemical fertilizers that contain nitrogen and phosphoric acid, with the planned launch of that facility around October 2018.

For fiscal 2017, Marubeni plans an annual output of 30,000 tons. The facilities will gradually ramp up production, eyeing an output of 150,000 tons in fiscal 2020. The sales target for that year is 6 billion yen.

Marubeni positions agriculture as a growth field. U.S. grain trader Gavilon, which the company acquired in 2013, is to supply ingredients for fertilizers, and American subsidiary Helena Chemical will provide specialized know-how in fertilizer placement.

China- and Thailand-made fertilizers currently dominate the Myanmar market. The high-quality products that Marubeni is ready to provide are not commonly used there, according to the Japan External Trade Organization. And the Myanmar market is only one-fifth the size of the Thai or Vietnamese markets, with demand in 2013 coming to 520,000 tons, according to sources, including the International Fertilizer Development Center.

But Marubeni expects demand to grow, after seeing firsthand how its training in using fertilizers led farmers to boost output. Marubeni provided such training to some 200 of the country's farmers in the past two years or so, and projects the fertilizer market to more than double in a decade.

Another trading company, Mitsui & Co., is moving to build a Myanmar plant for rice-farming fertilizers. Farming equipment maker Kubota plans to set up an assembly facility -- highlighting Japanese companies' advance into Myanmar's agriculture sector.

Source: Nikkei